As the employer, you can contribute up to 20% of your self-employment earnings or 25% if your business is incorporated, says John Heywood, a principal at Vanguard Group's retail-investor unit.
Next year you'll be able to deduct from your self-employment earnings 100% of the health insurance premiums you pay, up from a 70% deduction this year and 30% in 1996.
Caution: While LLCs are popular these days, it is unclear under current law whether owners are liable for the self-employment tax on all their earnings, or on just the salary they take out.